We now have all of our little man's toys in his room, and he can bring them out (and put them back) to play with them in the living room. Baby girl has a basket for her toys, that stays in the living room. We also have a blanket we keep on top of the basket that she can play on.
Here are some tips to keeping your home kid friendly
1. Baby Proof (with in reason)
Sounds obvious but make sure that there are no breakables with in reach (or climbing reach), that the knives and other sharp kitchen items are safely out of reach. Make sure your home is safe for the kids.
2. Give them some room to play
Our son used to pull our nicely organized DVD's down, they were all alphabetized and it drove us absolutely crazy when he continually did it, no mater how many time outs he received. However we moved all of his movies to a separate shelf and told him he was allowed to play with those, and the problem was solved. His DVD's look like a mess, but it is only one small shelf in the corner opposed to our entire collection in middle of the living room.
3. Make it clean-able
Kids are messy, white couches look pretty but not if they are stained with crayon. We painted our home with eggshell so that the walls are wipeable, we used scotch guard on all of our furniture to make it all as easy to clean as possible. Try and make things as wipeable and easy to clean as possible, it will make your life with kids easier.
Bottom line, make sure your home is a place where the kids can make memories, not full of breakables and easy to clean.